XTO Energy Inc. will develop acreage in the northeastern portion of the Piceance Basin in northwest Colorado under a farm-in agreement with ExxonMobil Corp., the producer said Thursday. The arrangement is similar to one ExxonMobil established with Apache Corp. last year for other North American properties..
Under the terms of the agreement, XTO will farm-in 69,500 contiguous gross acres east of ExxonMobil's Piceance Creek Unit in Rio Blanco and Garfield counties. XTO Energy will operate and earn 50% working interest ownership in the entire leasehold position by drilling four wells. XTO anticipates the first well, targeting the Williams Fork (Mesaverde) formation, to begin drilling by the end of this year.
"This deal highlights another success in partnering with the majors to create mutually beneficial opportunities -- whether acquisitions, trades or joint ventures," said XTO CEO Bob R. Simpson. "XTO Energy has earned a solid reputation with our operational track-record. We are proud that our team will put its expertise, focus and determination to work on this project."
XTO President Keith A. Hutton added that the Piceance Basin "is an ideal addition to our tight gas and unconventional property base. This acreage position exposes XTO to a portion of the trillions of cubic feet of natural gas the basin is projected to hold. Now, we move forward with our drilling plans, evaluate the results and look towards successful execution for the future."
In a similar joint agreement first set up in May 2004, Apache was given 28 of ExxonMobil's producing oil and natural gas fields in West Texas and New Mexico, as well as exploration rights on more than 370,000 undeveloped acres in Alberta (see Daily GPI, May 25, 2004). The two expanded their venture in Alberta, with ExxonMobil Canada Energy farming out its interest in 650,000 acres of additional undeveloped property interests in Canada to Apache Canada Ltd. (see Daily GPI, May 6). Apache also is testing additional horizons in 140,000 acres of the Canadian property conveyed in 2004. Since signing its 2004 agreement with ExxonMobil, Apache has drilled 86 wells and completed 73 wells with tested capacity of 52 MMcf/d.
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